PowerHouse Energy jigsaw is coming together

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The pieces of the jigsaw are coming together for PowerHouse Energy Group PLC (LON:PHE) after completing an all-paper acquisition of its development partner Waste2Tricity in July.

PowerHouse, which has developed the DMG process that produced hydrogen from plastic waste, has had plenty more irons in the fire in what has been a transformative 2020.

Infrastructure group Peel Environmental signed commercial terms for the application of the DMG technology, whereby PowerHouse will receive an annual license fee of £500,000 for each DMG plant developed by Peel.

With planning permission granted in March 2020, this is the first of 11 agreed sites in partnership with Peel.

Using the DMG process, the plants will take unrecyclable household plastic waste and thermally convert it into a valuable intermediate product called syngas – a mix of hydrogen, methane and carbon monoxide.

Overseas, PowerHouse in 2020 also inked a heads-of-terms agreement with Hydrogen Utopia International for a potential licensing deal in Poland, where Powerhouse could grant an exclusive non-transferable licence for the DMG technology.

What it does

Powerhouse has developed a proprietary process technology – DMG – that can utilise waste plastic, end-of-life-tyres, and other waste streams to efficiently and economically convert them into syngas from which valuable products such as chemical precursors, hydrogen, electricity and other industrial products may be derived. Powerhouse’s technology is one of the world’s first proven, distributed, modular, hydrogen from waste (HfW) process.

Syngas can either be burned to produce electricity or, as is the case with the Peel roll-out, the hydrogen can be separated out to power fuel cells in vehicles.

The business and technology has third-party technical validation from technical assurance company DNV-GL.

How it’s doing

The company has identified 77 sites in the UK as potential locations for facilities using its waste-to-energy DMG technology.

In an update to the market in March 2021, PowerHouse said the development of the UK pipeline will form the springboard for the international expansion of its business model.

The first overseas project is likely to be in Poland, following the non-binding heads of terms agreement signed last November with Hydrogen Utopia International (HUI).

The company intends to examine market conditions in other east and Central European countries later this year. As in the UK, where it has teamed with Peel L&P Environmental to develop a DMG plant at the Protos Energy Park in Cheshire, the plan will be to seek partners in these new geographies.

What the boss says: Tim Yeo, the executive chairman

“This is an exciting year for PowerHouse Energy as we focus on the Protos build and aim to see good progress of our technology in Poland. As we look ahead to the all-important United Nation’s Climate Change Conference of the Parties (COP26) in Glasgow later this year, we hope PowerHouse technology can be championed as a part of the solution to the world’s environmental challenges.” 

Tried and tested approach

PowerHouse has said that it will stick to the tried and tested licence fee approach for the vast majority of the deals in the pipeline, though there are projects where other revenue models may apply.

Financial close for Protos and the Waste2Tricity acquisition are landmarks that were expected to make PowerHouse a more attractive investment proposition, particularly from an institutional investor perspective.

This was confirmed with a £5mln fundraise completed in the summer, which will be used to help grow the operational team, support cashflow for project activities and strengthen the balance sheet.

>Critical stage 

Explaining his decision to relinquish the CEO role in order to personally take over the Protos project, Ryan said: 

“Powerhouse is at a critical stage of its development, we are a company poised for growth in the next decade.”

“I believe that putting the team in place for that delivery during the project in coming months will have the benefit of providing them with the delivery experiences to guide future decisions.”

“My challenge will be to concentrate on the key issues to deliver an operating process to specification and to nurture a younger team to deliver growth for the next decade.”

After a long time in charging mode, PowerHouse shares finally lived up to their name in 2020, rising over 500% in the year to date, but still with a number of potential value kickers still to come.

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